Indirect Cost Recovery

Feb 3rd, 2012
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The case is about Stanford University’s cost accounting methods for the grants, contracts and other agreements with the federal govt.

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Stanford University (A):Indirect Cost RecoveryIntroduction? The case is about Stanford University's cost accounting methods for the grants, contracts and other agreements with the federal govt.? There are 2 types of costs involved - direct and indirect costs. ? Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity; or that can be directly assigned to such activities relatively easily with a high degree of accuracy. E.g. salaries, supplies, etc.? Indirect costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project. E.g. depreciation, library expenses, maintenance, etc.Cognizant agency? For proper auditing of the accounting process, a single federal agency known as the cognizant agency is responsible for the negotiation of the indirect cost rate at each university.? This rate applies to all federal agencies (e.g., the National Institutes of Health, the National Science Foundation, the National Aeronautics and Space Administration). ? The cognizant agency is also responsible for the auditing of contracts at that university.? The Department of Defense (DoD) is the cognizant agency for Stanford. Within the DoD, the Office of Naval Research (ONR) negotiates cost rates, while the Defense Contract Audit Agency (DCAA) conducts audits.2 rates that apply to direct

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